The federal government is offering tax credits worth up to $7,500 to encourage Americans to buy electric vehicles (EVs). The credits can be immediately applied to the purchase of a new EV, giving consumers a significant discount on some vehicles.

But not all EVs are eligible for the credit, and some are only eligible for half of it. If you’re in the market for a new EV this year, here’s what vehicles qualify for the credit, how much you’ll get, and one hidden cost of EVs you should be aware of.

These new EVs qualify for the tax credit

It’s worth mentioning that some hybrid cars qualify for the tax credit, and some used EVs qualify as well, but I’m only listing new 2024 EV models here. Here are the new models that qualify and how much of the tax credit you’ll receive:

1. 2024 Tesla Model 3 Performance ($7,500)
2. 2024 Tesla Model Y ($7,500)
3. 2024 Tesla Model X ($7,500)
4. 2024 Ford F-150 Lightning ($7,500)
5. 2024 Cadillac Lyriq ($7,500)
6. 2024 Chevrolet Blazer ($7,500)
7. 2024 Acura ZDX ($7,500)
8. 2024 Honda Prologue ($7,500)
9. 2024 Volkswagen ID.4 ($7,500)
10. 2024 Rivian R1S ($3,750)
11. 2024 Rivian R1T ($3,750)
12. 2024 Nissan Leaf ($3,750)

You might be wondering why these new EVs made the cut while others didn’t, and why a handful of them aren’t eligible for the full tax credit. Essentially, to receive the full $7,500, a vehicle needs to be assembled or manufactured in North America and have a list price of $55,000 or less if it’s a car or $80,000 or less if it’s an SUV or light truck.

Additionally, at least 40% of the vehicle’s battery materials must be sourced in the U.S. or with its trade partners. If a vehicle doesn’t meet the battery sourcing requirements but does meet the manufacturing/assembly requirements and price, it may only be eligible for half the credit amount.

One hidden cost of EVs you should know about

The EV tax credit can go a long way toward making some EVs more affordable, but there are costs associated with electric vehicles that consumers should understand. Namely, electric vehicles are more expensive to insure.

EVs may cost more to insure than gas-powered vehicles because they’re more expensive to repair and replace. Progressive Insurance says there are fewer technicians trained to fix EVs than there are for gas-powered vehicles, which translates to higher repair bills.

EV battery costs are also a factor. The replacement cost for an EV battery can be between $4,000 and $20,000, according to Progressive. Insurance companies factor this cost into EV insurance policies and sometimes may even write an EV off as a total loss if it’s an accident and the battery is damaged.

How to get better EV insurance rates

The good news is that as EVs become more common, some of these costs will likely go down. But for now, it means that EV owners may want to spend some extra time comparison shopping for the cheapest insurance rates. Compare prices from at least three companies to ensure you get the best rate for you.

It’s also a good idea to try to improve your credit score before you sign up for EV car insurance. Most car insurance companies rely on credit scores to help determine premiums, so having a higher score could save you money. Paying your bills on time and reducing the total amount you owe will have the biggest impact. Those two categories account for 65% of your total score.

And finally, speak with your insurance company about the discounts you might qualify for. Bundling your home insurance (or renters insurance) with your auto insurance can save you up to 5%. Taking a defensive driving course can also lower your auto insurance premiums by 5% to 20%.

Tapping the available federal tax credit could make buying an EV far less expensive this year, but just be ready for an insurance increase if you decide to buy one. Taking a few steps now toward finding lower insurance rates could help you avoid insurance sticker shock later.

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